Well, the blogging has been a little slow this week, so how's about a little rant?
Here's an article from the New York Times that got me annoyed:
The new bankruptcy law, which goes into effect on Monday, now requires credit counselling before debtors can file for bankruptcy. Why is that a bad thing?
Basically my reasons for getting ticked off about this are twofold. First, it's just another step that makes it more difficult and expensive to file for bankruptcy and seek relief from creditors. Sure, sure, I can already sense fingers moving toward keyboards to post comments out there. Steanso, is each and every American not responsible for his own spending and financial planning? Do creditors not deserve to be reimbursed for the goods and services which they offer?
I guess that my answer is.... sort of. Of course I recognize that people need to be responsible for their own decision making, including their finances, but at the same time we live in a culture which saturates us with sales pitches and unbiquitous advertising at every stage of our lives. I'm not saying creditors should not bear any responsibility for their actions, but I guess that I'm asking a question about how much responsibility lenders should bear for offering credit to people who are clearly known to be poor credit risks, and who are nonetheless constantly inundated with offers to finance purchases and borrow money. We live an the era where halftime reports and sports stadiums carry the names of corporations and products, an age where commercials "pop up" at us on the internet as we try to read the news, where buses and taxis carry the billboards of strip clubs and television shows, and in which scrolling slogans appear above our heads on blimps when large crowds gather. My morning radio comes on to signal the start of my day, and before I can open my eyes I'm listening to the latest deals that I can get on a new Chevy. Our culture and our system of economics drive us to be consumers. The desire to buy things is what propels our society, and that desire is feverishly nurtured. Expensive products become status symbols and even our self worth becomes tied to the amount and quality of objects that we can afford to purchase.
But sometimes the system works too well. Logic falls prey to desire. Some of this is to be blamed on the debtor, to be sure. But when creditors want to keep lending money to people without checking to make sure that these people are going to be able to pay that money back, I think the creditor deserves some of the blame.
Also, by the way, my second point was meant to be that these credit counselling groups are making a profit off of this whole enterpise of lending advice to debtors (the IRS is trying to revoke the nonprofit status of twenty of these organizations by the end of the year). They are not only making a profit, but they are making their profits off the backs of people who literally do not have any money to spend in the first place. In addition to the "impartial" debt counselling which they provide, the debt counselling agencies typically offer debt management services which allow creditors to pay off debts at a reduced rate through the debt counselling/management agency. Creditors, in turn, pay the agencies a fee for "settling" these debts, recognizing that settling these debts at a reduced rate will be more advantageous than letting the cases go to bankruptcy. So, what you get is an agency that's handing out advice to people about whether or not they should file bankruptcy (annoying bankruptcy lawyers, incidentally, who say that many debt counsellors do not even truly understand bankruptcy, and that they inappropriately try to steer people away from it at all costs), while at the same time that same advice-giving agency is collecting money from creditors which can only be obtained if bankruptcy is avoided. It's a screw job, you dig?
Anyway, it's a random rant, but it gets at the heart of some of the things that bug me about our consumer culture. Anyway, creditors have lots of money. George Bush and the GOP love people with money. We got a new bankruptcy law.
"Money- it's a hit,
Don't give me that do goodey good bullshit..."
-Pink Floyd, Money